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On December 1, 2019, Keenan Company, a U.S. firm, sold merchandise to Velez Company of England for 100,000 euros. Collection of the receivable is due

On December 1, 2019, Keenan Company, a U.S. firm, sold merchandise to Velez Company of England for 100,000 euros. Collection of the receivable is due on February 1, 2020. Keenan purchased a foreign currency put option with a strike price of $1.10 (U.S.) on December 1, 2019. This foreign currency option is designated as a cash flow hedge. Relevant exchange rates follow:

Date Spot Rate Option Premium
Dec. 1, 2019 $1.10 $0.10
Dec. 31, 2019 $1.09 $0.08
Feb. 1, 2020 $1.07 N/A

What would be the net impact of this transaction on Keenan's income statement in 2020?

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